In a major blow to BSNL, the Karnataka High Court has ordered a cooperative bank to pay compensation and damages worth more than Rs 55 lakh. The court admitted that due to a duplicate SIM card issued carelessly by BSNL, cyber thugs were successful in withdrawing more than Rs 87 lakh from the bank account. The court said that duplicate SIMs issued without proper verification gave criminals access to banking OTPs, following which they conducted many unauthorized online transactions.
How did the fraud of Rs 87 lakh happen?
This matter is related to Shri Basaveshwar Pattana Cooperative Bank Regularta. The bank had a current account in Canara Bank, which was linked to a BSNL mobile number. OTP for internet banking transactions used to come on this number. Between 6 and 7 February 2019, seven unauthorized transactions were made from the bank account through RTGS and NEFT, the total amount of which was Rs 87.7 lakh.
Investigation revealed that an unknown person had obtained a duplicate SIM of the bank’s registered mobile number from the BSNL office in Bengaluru. The bank claimed that it had not given any request or permission for this SIM. After getting the duplicate SIM, the fraudsters started getting OTP and transferred money from the bank account.
However, later Rs 30 lakh was recovered and Rs 7.12 lakh more were recovered through police action. Despite this the bank suffered a loss of Rs 50.50 lakh.
Why was BSNL held responsible?
Justice Suraj Govindraj, who is hearing the case, said that the duplicate SIM reaching a non-customer is clear evidence that the verification process either did not take place or was done very carelessly. The court said that when the mobile number is linked to banking OTP and large financial transactions, then the responsibility of the telecom companies increases further.
The court also said that a BSNL employee was found responsible for issuing duplicate SIMs and departmental action was also initiated against him. In such a situation, BSNL cannot save itself from responsibility even after admitting the fault of its employee.
Insurance argument also rejected
BSNL argued in the court that the bank has already received some amount back from insurance and other sources, hence it should not be given additional compensation. Rejecting this argument, the court said that if an organization has taken insurance out of prudence, then it does not eliminate the responsibility of the negligent party.
How much compensation will have to be paid?
Karnataka High Court increased the compensation given earlier and ordered BSNL to pay the following amount.
- Basic compensation Rs 50,50,762
- Rs 5 lakh additional compensation
- 9% annual interest from 7 February 2019
Along with this, the court also rejected BSNL’s petition challenging the compensation order. This decision is being considered an important example in matters related to responsibility of telecom companies and banking security.
Leave a Reply